Yuanta Securities Korea projected that the global nuclear power plant business will lead to large orders for Hyundai E&C. It maintained an investment opinion of "buy" and raised the target price from the previous 47,000 won to 100,000 won, an increase of 112%. Hyundai E&C's closing price on the previous trading day was 73,700 won.
Yuanta Securities Korea anticipated that Hyundai E&C's growth would become visible through nuclear power plant demand exceeding supply. In particular, it is analyzed that Hyundai E&C's nuclear power business will become full-scale starting from the large nuclear power plant design, procurement, and construction contract (EPC) scheduled in the fourth quarter (October to December) in Bulgaria and the small modular reactor (SMR) contract in Palisades, Michigan.
Jang Yun-seok, a researcher at Yuanta Securities Korea, noted, "The large nuclear power plants being pursued in Slovenia and Finland with Westinghouse and the volumes of 'Team Korea' are also in a situation where they can be secured. Simplifying the assumptions, if we assume that Hyundai E&C can secure half of the business cost of 10 trillion won for each large nuclear power plant that can be ordered in the future, an additional backlog of 30 trillion won is possible by 2030."
He added that, "If the two SMR projects being pursued with Holtec are reflected here, an additional 3.5 trillion won will be added."
The positive aspect is that the nuclear power business, which can generate revenue over a long period, can overcome the limitations of the cyclical nature of the construction industry.
Researcher Jang stated, "The high profit volatility that had appeared historically according to the domestic housing market cycle was a discount factor in valuation. Considering the profit increase cycle that is becoming visible not only in the nuclear business but also in the housing business, Hyundai E&C will be a stock that cannot be excluded from the mid- to long-term portfolio."